Green Dome Industries has 8 million shares outstanding and is about to issue 10 million new shares in an iPO. The IPO price has been set at $15 per share, and the underwriting spread is 6%. The IPO is a big success with investors, and the share price rises to $35 the first day of trading. (a) What is amount of capital raised during the IPO? (b) What is the amount that Green Dome paus as the underwriter's spread? !

Green Dome Industries has 8 million shares outstanding and is about to issue 10 million new shares in an iPO. The IPO price has been set at $15 per share, and the underwriting spread is 6%. The IPO is a big success with investors, and the share price rises to $35 the first day of trading. (a) What is amount of capital raised during the IPO? (b) What is the amount that Green Dome paus as the underwriter's spread? !

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Beta Corporation’s current stock price is $90 and total number of shares is 1 billion. The company will generate free cash flow of $10 billion for the year ahead, all of which it will payout to its shareholders as a dividend. What would be the price at the ex dividend date? (SHOW YOUR WORK)
K Zoom Enterprises expects that one year from now it will pay a total dividend of $4.8 million and repurchase $4.8 million worth of shares. It plans to spend $9.6 million on dividends and repurchases every year after that forever, although it may not always be an even split between dividends and repurchases. If Zoom's equity cost of capital is 13.2% and it has 4.7 million shares outstanding, what is its share price today? The price per share is $ (Round to the nearest cent.)
XYZ Inc., a firm with 4 million shares outstanding each earning $5 in an industry that has an average P/E ratio of 4, has hired an investment-banking firm to help it go public. XYZ will issue 1 million new shares and incur $450,000 in indirect costs combined with 7%-spread fees charged by the underwriter. What is the correctly valued offer price of the IPO?
Cliff Corp (CC) has assets of $300 million including $25 million in cash. CC has 1 million share of stock outstanding and $70 million of debt. Assume capital markets are perfect. What is CC’s current debt-to-equity ratio? What is CC’s current stock price? If CC distributes $18 million in dividends, then what is the new ex- dividend share price? If instead of paying the dividend CC repurchases $18 million of stock, then what will be the new share price? What is the new debt-to-equity ratio after the payout?
ABC Corporation will be investing in X Corporation shares. X provided dividends of 45 per share last year. ABC requires a return of 15% but expects X to have an equity growth rate of 9%. If ABC paid 800 for each share of X, how much did ABC over/under pay?
Suppose that the newspaper publishing company described above expected net earnings is $85 million and the firm is going public and will issue 15 million shares of stock. What is the price of the IPO using the P/E ratio if the forward P/E of comparable newspapers is 15x?
2) You bought 1500 shares of Microsoft one year ago for $120 per share. Microsoft paid a $2 (per-share) dividend last year. The current stock price is $105. a. What rate of return did you earn from your Microsoft investment? b. Ifinflation rate over the last year was 4%, what is your real rate of return? c. Rather than buying 1500 Microsoft shares a year ago, you instead sold them short. What is the rate of return from your Microsoft trade now? Focu MacBook Pro A
Zang Industries has hired the investment banking firm of Eric, Schwartz, & Mann (ESM) to help it go public. Zang and ESM agree that Zang’s current value of equity is $60 million. Zang currently has 4 million shares outstanding and will issue 1 million new shares. ESM charges a 7% spread. What is the correctly valued offer price, rounded to the nearest penny? How much cash will Zang raise net of the spread (use the rounded offer price)?
Use the following information to answer the question(s) below. Nielson Motors (NM) is a newly public firm with 25 million shares outstanding. You are doing a valuation analysis of Nielson and you estimate its free cash flow in the coming year to be $40 million. You expect the firm's free cash flows to grow by 4% per year in subsequent years. Because the firm has only been listed on the stock exchange for a short time, you do not have an accurate assessment of Nielson's equity beta. However, you do have the following data for another firm in the same industry: Equity Beta Debt Beta 0.4 Debt - Equity Ratio 1.5 1.8 Nielson has a much lower debt - equity ratio of .5, which is expected to remain stable, and Nielson's debt is risk free. Nielson's corporate tax rate is 40%, the risk - free rate is 5%, and the expected return on the market portfolio is 10%. Nielson's estimated equity beta is closest to: O A. 0.95 OB. 1.25 O C. 1.00 OD. 1.45
please answer the question as in attached file asap. thanks
D1 = $1, g = 6.00%, β = 2, market risk premium = 5 %, and risk free rate = 5 %. Find stock price (Hint: r = risk free rate + beta * market risk premium = 5% + 2*5%) $11.11 $8.93 $10.08 $9.56
Baghiben

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